How to reduce debt and have a fresh start
Recently it has been increasingly easy to borrow large sums of money for various purposes
. A friend of mine has even mentioned recently saying that ten years ago in order to get a mortgage all you've had to do is bring a contract phone which would be enough of a background check for the bank. While obviously making a massive exaggeration, he did make a valid point. Things have changed over the last couple of years and now most people are struggling with their finances this way or another, it has become much harder to borrow money and we finally discovered that there's something called credit score.
But is has not always been this way. Some of us are faced with debt now, because of the commitments we've made somewhere during the last decade when no-one expected credit crunch, redundancies and repossessions.
The life goes on however, and the most we can do now is equip ourselves with knowledge and somehow find the right attitude to fight the debt and become free again. Some of the actions require simply filling and online form or making a phone call but most will force a serious approach and a change of lifestyle.
1. First of all, don't ever ignore your debt. It has that nasty habit of growing when you're not watching and sneaking up on you when you expect it the least, so always be on top of the finances. If you're not the type of person to follow all the expenses - you need to become one. Unless you're on a wage which allows you the comfort being totally oblivious to amounts of spending. But then again if it did, you simply would not be in debt.
2. Don't be afraid to seek help. Sharing your financial problems with other people is never a pleasant experience but please be aware that it sometimes is a necessity and an opportunity not worth missing. If one phone call could cut the amount of your monthly repayments in half wouldn't it be worth it?
3. As much as you can, try not to miss any monthly payments. Apart from the obvious reasons such the threat of repossession there are other factors you may take into consideration. If you know that this month you will have a hard time paying for the motor insurance - give them a ring or write an email and explain. It will take only a couple minutes of your time and may, in most cases, result in you payments being postponed. In the lender's eyes there is a whole world of difference between person who just doesn't pay and someone who encounters temporary financial slump and needs some time to get his act together. It works, I know because I've tried it.
4. There may be a point where loads of smaller loans with high APR kill your budget and you find yourself paying the interest itself month by month instead of reducing the actual debt. You will then know it's the time to look into what debt consolidation services have to offer. Debt consolidation company will take on managing your debts, getting in touch with debtors and setting you a smaller monthly payment. Then every month they will distribute that money to whichever debt requires it the most. It leaves everyone happy - debtors know they will get their money eventually, the company managing your repayments gets their small share and you start rebuilding credit score and living your life again.
5. Isn't it time to work some more? Perhaps grab a few hours overtime or get an extra part-time job? The thought of spending your weekend at work rather than resting after your regular job is far from pleasant but please keep in mind that your aim is to get rid of debt as soon as possible. If two months of extra work could help you achieve that - then by all means it's worth it.
The most important thing however, is not to get depressed over your debt. It's hard to enjoy your life knowing that you owe someone large amounts of money but the more you think about it the worse it becomes. Sit down, make an erase debt management plan and just go for it. You'll live a new life soon!
How to reduce debt and have a fresh start
By: Grist Lok
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